China 'ready for currency war'

BEIJING - A top Chinese central banker says his country is "fully prepared for a looming currency war", state media reported on Saturday.

However, the conflict could be avoided if major countries observe the consensus reached at the recent G20 meeting to focus monetary policy primarily on domestic economies, said Yi Gang, deputy governor of the People's Bank of China.

G20 members "had shown no signs of scaling back monetary easing that has injected a flood of cash into global markets" the Xinhua news agency said, highlighting the 20% depreciation of the yen against the US dollar since Japanese Prime Minister Shinzo Abe took office in December.

The United States and some other countries have accused China of keeping its yuan artificially undervalued in order to improve the country's export performance.

"China is fully prepared," Yi told Xinhua. "In terms of both monetary policies and other mechanism arrangements, China will take into full account the quantitative easing policies implemented by central banks of foreign countries."

Chinese manufacturing grew at its weakest rate in five months in February according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing on Friday.

The Purchasing Managers' Index in the manufacturing sector fell to 50.10 in February from 50.40 the previous month, indicating recovery had slumped to its slowest rate since September.

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